Cape officials mull use tax, letting quarter-cent sales tax expire

Cape Girardeau city officials may place a use-tax proposal before voters in 2019 that would be linked to elimination of a sewer capital-improvements sales tax.

City manager Scott Meyer outlined the plan at the city council's retreat last week. The plan is still being drafted, and the council has made no final decision.

The one-fourth-cent capital-improvements tax for sewer projects is slated to expire Dec. 31, 2019. Rather than seek an extension, city officials are discussing the possibility of asking voters to approve a use tax.

Meyer told the council the use tax would generate about the same amount of money as the capital-improvements sales tax. According to city finance director John Richbourg, the capital improvements tax generates about $2.5 million annually.

City officials said consumers would pay one-fourth-cent less in sales taxes at Cape Girardeau stores if the capital-improvements tax ends.

The use tax would be levied on out-of-state purchases, and the rate would equal the total sales tax rate charged on purchases in the city.

Richbourg said Tuesday the rate is 2.75 percent. It would be lowered to 2.5 percent if the capital-improvement sales tax expires, he said.

Mayor Harry Rediger and other council members expressed support for the tax plan.

"I think it makes all kinds of sense to do," Rediger said at the retreat.

He added, "Potentially, it (a use tax) would have a lot more effect on revenue."

City officials said internet sales continue to grow.

"Some people want to click and buy," Meyer said.

Without a use tax, the city will be unable to benefit from such sales, officials said.

"We are at risk of a diminishing revenue base," Rediger said.

Cape Girardeau County and other surrounding local governments have use taxes.

"We are surrounded with it, but the cities of Cape Girardeau and Jackson do not," Rediger said.

Meyer told the council if Cape Girardeau voters approve a use tax, the city could designate part of that tax revenue for capital improvements.

Several council members suggested some of the tax revenue could go for city operational needs.

Ward 6 Councilman Wayne Bowen said he favors putting more money into operation of the police and fire departments as well as a tax cut.

Ward 5 Councilman Bob Fox said, "A nice thing with a use tax is that a big portion of the citizenry won't pay it."

Fox added, "I look at it more as a fair tax than a use tax."

Meyer said Cape Girardeau retail stores could close, putting people out of work, if internet sales continue to have a tax advantage.

"It is a huge issue," he said. "This (use tax plan) is a step in the right direction."

Rediger said it will take "a full-court press" with local merchants to win voter approval.

Cape Girardeau and Jackson voters twice have rejected a use tax: once in April 2014 and again last year.

Cape Girardeau city officials said a use tax is a general-purpose tax that can be used for any municipal government purpose.

At the retreat, city officials expressed concern about meeting future operational needs.

Fire chief Rick Ennis said, "We seem to be capital-rich and operating-poor."

mbliss@semissourian.com

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